Business & Society, 16e (Lawrence)
Chapter 7 Business-Government Relations
1) Government and business together establish the regulatory rules under which business operates
in society.
2) In Europe, unions are prohibited by law to be on businesses’ administrative boards.
3) A cooperative government-business relationship on one issue does not guarantee cooperation
on another issue.
4) Public policy is a plan of action undertaken by business to influence the government.
5) In non-democratic countries, the power of government may derive from a monarchy, military
dictatorship, or religious authority.
6) Monetary policies refer to policies that affect the supply, demand, and value of the nation’s
currency.
7) A national health care policy is an example of an economic policy.
8) New improved mining equipment that was found to increase cases of black lung disease because
it generated higher levels of dust in the mines is an example of negative externalities.
9) Economic regulations aim at modifying the normal operations of the free market and the forces
of supply and demand.
10) Predatory pricing is a violation of antitrust laws.
11) Cost-benefit analysis is often used to determine the costs of regulation.
12) Regulatory activity is often cyclical.
13) Regulation cannot be applied to international business behavior.
14) Sometimes national leaders resist the notion of international regulation, seeking to control
matters of commerce themselves within their own countries.
15) The United Nations oversees all international agreements concerning regulations between
nations.
16) Managers’ understanding of government regulations is:
A) Both a domestic and international issue.
B) Primarily a domestic issue.
C) Primarily an international issue.
D) An international issue only for large firms.
17) European Union regulators accused Uber of engaging in:
A) Price-fixing.
B) False advertising.
C) Unfair competition.
D) Unhealthy working conditions.
18) Government’s role is to create and enforce laws that:
A) Control businesses’ actions in society.
B) Protect businesses’ interest in society.
C) Protect society from business.
D) Balance the relationship between business and society.
19) Around the world, government:
A) Tends to cooperate with business.
B) Tends to be in conflict with business.
C) Sometimes cooperates and sometimes is in conflict with business.
D) Tends to be controlled by business.
20) Cooperation between business and government often occurs when:
A) They encounter a common problem or enemy.
B) Business can afford it.
C) Business operates at arm’s length from the government.
D) Government has the support of the people.
21) When a government orders companies not to conduct business in another country because of a
war, human rights violations, or lack of a legitimate government; these orders are called:
A) Government bailouts.
B) Political sanctions.
C) Economic sanctions.
D) Government stop-orders.
22) Past decisions of the courts, the original basis for the U.S. legal system, are called:
A) Torts.
B) Amendments.
C) Legitimate actions.
D) Common laws.
23) The Mullahs in Iran is an example of the power of government derived from:
A) A monarchy.
B) A military dictatorship.
C) A religious authority.
D) A democracy.
24) Governments being asked to regulate driving distractions are examples of a public policy:
A) Input.
B) Goal.
C) Effect.
D) Tool.
25) Public policy tools involve a combination of:
A) Incentives and political favors.
B) Penalties and prison terms.
C) Incentives and penalties.
D) Political favors and prison terms.
26) Patterns of government taxing and spending that are intended to stimulate or support the
economy are:
A) International standards policies.
B) Social assistance policies.
C) Fiscal policies.
D) Monetary policies.
27) Policies that affect the supply, demand, and value of a nation’s currency are:
A) International standards policies.
B) Social assistance policies.
C) Fiscal policies.
D) Monetary policies.
28) By raising and lowering the interest rates at which private banks borrow money from the
government, the Federal Reserve Bank:
A) Influences the size of the nation’s money supply.
B) Influences the value of the dollar.
C) Minimizes investor confidence about the nation’s future.
D) Both of these answers are correct: Influences the size of the nation’s money supply; and
influences the value of the dollar.
29) The primary way of accomplishing public policy is through:
A) Waiting for businesses to act.
B) Lobbying Congress.
C) Regulation.
D) Writing your politician.
30) When the market fails to adjust for the full costs of a firm’s behavior, this is called:
A) Negative externalities.
B) Deregulation.
C) Market failure.
D) Re-regulation.
31) Which of the following are examples of natural monopolies?
A) Electric utilities and railroads.
B) Cable television and the media.
C) Internet services and trucking.
D) None of these answers are correct.
32) Government regulations help balance negative externalities such as:
A) No smoking rules enforced to mitigate the effects of second-hand smoke.
B) Gender controls over alcohol purchases and consumption.
C) Drug testing at private businesses.
D) Age restrictions for Social Security recipients.
33) Regulation can be argued as justified based on:
A) Collective market theory.
B) Utilitarian and justice grounds.
C) The life cycle of regulation.
D) Tradition.
34) Economic regulations are illustrated by which action?
A) Allowing market forces to set prices.
B) Preventing anticompetitive business practices.
C) Providing protection of pension benefits.
D) Ensuring safe working conditions.
35) An example of an economic regulatory agency is:
A) Consumer Product Safety Commission.
B) Equal Employment Opportunity Commission.
C) National Highway Traffic Safety Administration.
D) National Labor Relations Board.
36) An example of a regulatory agency charged with enforcing social regulation is:
A) Federal Aviation Administration.
B) Federal Trade Commission.
C) Federal Communications Commission.
D) Internal Revenue Service.
37) Total social regulation costs are:
A) Slightly higher than total economic regulation costs.
B) Slightly less than total economic regulation costs.
C) Significantly higher than total economic regulation costs.
D) Equal to total economic regulation costs.
38) Deregulation has occurred in the following industries:
A) Commercial airlines, sheet metal, and interstate trucking.
B) Commercial airlines, railroads, and financial institutions.
C) Commercial airlines, interstate trucking, and silicon chip manufacturing.
D) Financial institutions, railroads, and silicon chip manufacturing.
39) Reregulation is:
A) The adoption of regulation in another country to promote trade.
B) Necessary since all regulation has a time limit.
C) The increase or expansion of government regulation.
D) The shifting of regulation to the state level from the national level.
40) Antitrust laws protect consumers from:
A) Anticompetitive practices by business.
B) Selling products above cost to drive away rivals.
C) Conspiring with business partners to increase competition.
D) Firms using market dominance to expand commerce.
41) The antitrust enforcement agencies in the United States have the legal authority to:
A) Legalize and enforce fixed prices in the U.S.
B) Fine EU firms unfairly operating in Europe.
C) Block anticompetitive mergers in the U.S.
D) Issue tariffs against a foreign nation involved in illegal business practices.
42) Which of the following represents a structural remedy for an antitrust violation?
A) Paying a large fine.
B) Breaking up a monopoly.
C) Disclosure of company information to rivals.
D) Agreeing to change a firm’s conduct.
43) Economists reported that the costs of regulatory compliance were highest for:
A) Vehicle safety.
B) Antitrust issues.
C) Worker safety.
D) Consumer protection.
44) An example of a global regulation that mitigates the impact of jet fuel on the environment is:
A) The Aviation Plan.
B) The Clean Air Act.
C) The Space Force Initiative.
D) The International Space Station.
45) In the case Should Facebook Be Regulated, the primary market failure was:
A) Sales incentives to protect user data exceeded those of selling the data.
B) Sales incentives to sell user data exceeded those of protecting user privacy.
C) The market naturally disincentivized the sale of personal data and there was no market failure.
D) Unplanned costs to distribute user data exceeded the costs of selling the data.
46) How do governments seek to cooperate with or oppose business? Does it matter whether the
government is legitimately elected or has illegitimately acquired power?
47) Define each key element of the public policy process and provide an illustration or example for
each element.
48) Compare and contrast economic policies with social assistance policies.
49) Identify and compare the four reasons why governments turn to regulation as a way to solve
their problems.
50) Government regulations come in different forms. Discuss the major types of government
regulations of business.
51) What could the U.S. government do about the out-of-control costs of regulation and the
staffing of regulatory agencies in the United States?
52) Why does international regulation occur? Discuss the conditions that affect the regulation of
business in a global context.